Buying a home is often the single largest financial decision of your life, but it's also a deeply emotional milestone filled with excitement and dreams of the future. It is completely normal to feel a mix of thrill and anxiety as you navigate open houses and mortgage applications. We want to help you turn that anxiety into confidence so you can focus on building memories rather than worrying about the bills.
Mistake #1: Underestimating the full cost of ownership
Most homebuyers start with one simple question: "How much house can I afford?" Usually, this leads to looking at a single number, which is the monthly mortgage payment. If that number fits the budget, it feels safe.
The problem is that this is exactly where most people stop. They forget the "pluses" that make up the real cost of owning a home.
The real equation
Your actual cost looks more like this: Closing costs + Down payment + Monthly payments + HOA fees + Utilities + Furniture + Maintenance + Repairs + Renovations + Upgrades.
To avoid this trap, you need to list every potential cost before you sign on the dotted line:
- Closing costs: These are typically between 3% to 5% of the purchase price, though this varies by location.
- Down payment: Putting 20% down is generally recommended, but you should get advice on the specific amount that's right for you.
- Moving costs: Depending on distance, this ranges from a few hundred dollars to several thousand.
- New furniture: Be ready for sticker shock here. Furnishing a new space can run north of $10,000.
- Renovations: This varies widely based on the home's age and your taste, but it can easily be the second largest expense.
- Ongoing maintenance: We recommend putting aside roughly 1% to 3% of the value of your home every year just to cover maintenance.
Mistake #2: Letting emotions drive the bus
Why do we tend to underestimate costs? Because we have two different brains fighting for control. There's a feeling brain driven by emotion and a thinking brain driven by logic. Believe it or not, 90%+ of purchase decisions are based on emotions.
When we fall in love with a house, our emotions hijack the process. We stretch the budget or ignore those extra costs we mentioned above. This is a major reason why buyer's remorse happens.
How to find balance
You don't need to eliminate emotion entirely. Buying a home should be exciting! However, you do need to give yourself space.
Start by listing what really matters, such as bedrooms, yard size, or a home office. Next, get crystal clear on your budget before you start looking. Finally, pause after viewing a home. That simple act of reflection can help you regain calm and ensure you're making the right call.
Mistake #3: Buying the house instead of the lifestyle
Did you know that nearly two thirds of millennials have regrets about buying a home? Furthermore, almost 60% of homeowners have felt some form of buyer's remorse. This usually happens because they focused on a specific feature, like a chef's kitchen or a pool, rather than the life they wanted to live.
Falling in love with a feature can blind you to the drawbacks, like a terrible commute or a neighborhood that lacks community.
Define your life first
Before you shop for a structure, define the life you want to build inside it. How do you want to spend your time? Who are you spending it with? How important is walkability?
Be patient with this part of the process. The house isn't the key to a happier life. It's the life you build in and around it that matters.
Mistake #4: Confusing approval with affordability
Here is a critical reality check: approval does not equal affordable. Mortgage lenders will approve homebuyers for a payment that can be as high as 43% of income before taxes and workplace deductions.
Let's look at the numbers
Let's look at the numbers in a hypothetical example: Imagine you make $10,000 per month before taxes. A loan officer might approve you for a mortgage payment of up to $4,300 (that's 43% of your income).
If you have a $500 monthly car payment, they might lower that approval to $3,800 (because $500 + $3,800 = 43% of your income).
Now, let's look at your real take-home pay. Assume you pay 20% in taxes ($2,000) and you're saving 15% to your 401(k) ($1,500). That means you are only taking home $6,500.
In this scenario, that $4,300 mortgage payment would be 66% of your take-home pay. That leaves very little room for life.
A better rule of thumb
To keep your roadmap secure, try to follow these guidelines:
- Housing costs: Should not exceed 28% of your income before taxes.
- Total debt payments: Should not exceed 36% of your income before taxes (this includes mortgage, student loans, car loans, etc.).
Mistake #5: Assembling the wrong team
Most homebuyers work with a real estate agent and a loan officer, but incentives matter. Often, these professionals are incentivized to close the deal, not necessarily to protect your long-term financial health.
Who you need in your corner
To avoid costly mistakes, you want a team that looks at the big picture.
- REALTOR®: Look for this specific designation for higher ethical standards.
- Loan Officer: Find someone who educates you on options rather than just pushing for the max loan.
- CFP® professional: This is the missing link for many. A CFP® professional can look at how a home impacts your retirement, your cash flow, and your taxes, helping you create a plan to save effectively.
Bonus: The first-time buyer hurdle
If you're a first-time homebuyer, the learning curve is steep. It's easy to rush in before you're ready. Many buyers jump in before paying off other debt or before they've saved enough for those "pluses" like closing costs and furniture.
To navigate this, get your financial house in order first. Build a healthy credit score, as better credit equals lower rates. Look at how homeownership changes your tax situation and insurance needs. Most importantly, think about your future self. Are you planning on getting married or changing careers? Buying a home that meets your needs today and tomorrow ensures you get the best value over time.
Why a dedicated partner matters
At Facet, we believe financial health isn't just about the numbers in a spreadsheet. It's about how those numbers allow you to live a life aligned with your values. Buying a home is a massive commitment, and the traditional commission-based industry often ignores the human side of that transaction.
That's why we pair you with a dedicated CFP® professional who works for a flat membership fee. We don't make money by selling you a mortgage or pushing you to buy a more expensive house. We sit on your side of the table, helping you determine exactly what you can afford so you can sign those closing papers with total peace of mind. It's about giving you a clear roadmap so you can enjoy your new home without the stress.
